World Bank raises India’s GDP growth forecast: from 6.6% to 7.1% for FY27, benefiting from strong first quarter data

The World Bank has increased India’s GDP growth forecast for the financial year 2026-27 to 7.1%. Earlier in April, the World Bank had estimated the economy’s growth rate for FY27 at 6.6%. The organization has said this in its latest report ‘India Development Update’ released on Tuesday, September 6.

Despite global trade and tensions in the world, India’s economy has performed better than expected. The GDP growth of 7.8% recorded in the first quarter of FY-27 i.e. April-June has played an important role in this upgrade of the World Bank.

Strength gained from private consumption and export

According to the World Bank, investment and domestic consumption have been the biggest contributors to India’s economic growth.

Demand in both villages and cities: Strong agricultural performance in rural areas, government income support, food subsidies and low inflation boosted demand. On the other hand, after the income tax relief and GST reduction, there has been a big jump in urban consumption.

Better performance of exports: Despite adverse conditions at the global level, India’s exports have performed much better than expected, which is being considered as the biggest positive factor for the growth outlook of FY27.

Industrial activity picked up pace

On the supply side, industrial activities have shown excellent pace despite global challenges.

Boom in Infrastructure and Power: Growth in infrastructure and construction goods increased to 7.2% in the first quarter from 6.1% last year. Due to the scorching heat, the demand for utilities increased, due to which the electricity sector registered a growth of 9.3%.

Agriculture: Due to lack of rain till August, there may be a slight impact on rural demand. Although the rains since July have compensated for this deficiency to a great extent, the overall lack of rain has had little impact on agricultural prospects.

The pace of economy was 7.8% in FY-26

The World Bank reported that India’s economy had grown at a faster pace of 7.8% in FY26 after growing at a rate of 7.2% in FY25. Policies and easy credit environment had neutralized the impact of global trade tensions.

In FY27 too, the growth rate is expected to slow down slightly in the coming quarters after being 7.8% in the first quarter, but the overall trend will remain strong.

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